With the current cost-of-living crisis, soaring energy prices and rising interest rates, anyone planning to move home needs to make every penny count. This starts with negotiating the best price for your home but who will get you a better price for your home, a traditional estate agent or an online seller?
Over the last few years low-cost online estate agents like Strike, Yopa and Purplebricks have pushed traditional estate agencies hard, building their visibility and consumer awareness.
These online agents market themselves under the proviso that they will save you thousands in fees but is this claim justified? Or, particularly given widely held fears the market will soon harden because of increasing interest rates, is a physical agent on the high street still the best bet?
From a regulatory point of view, there is nothing to separate online and traditional agents. Both must either be members of the Property Ombudsman or the Property Redress Scheme. They must also abide by the Estate Agents Act and the Consumer Protection from Unfair Trading Regulations.
The figures would suggest the balance of power still sits with the physical agent. According to property consultancy TwentyCi, despite doing more marketing, less than 8% of sales go through the online agents.
There is also a fear that although the upfront cost will look lower, there are actually a range of hidden costs that will significantly impact the total cost of the sale for the vendor.
For example, Purplebricks charges £1,999 per sale in Greater London or £1,119 per sale everywhere else in the UK. This means that on a sale of a £300,000 home, the basic commission will be £1,800 lower than the average high street firm’s commission, 1% or in this case, £3000. Obviously, this difference will widen if the agent’s commission is higher.
You also need to be careful to check when the fee is due.
Traditional estate agents will not charge you if the property doesn’t sell. With online agents, the fee could be for the listing. This means you will have to pay the full fee or at least part of the fee irrespective of whether your home sells or not.
The way the fees are paid is also a potential concern. With a traditional agent, you pay when your home has been sold. With an online agent it’s often right at the start of the process. Does this mean that the physical agent is more incentivised to sell? To push through any blockages and help the seller navigate any difficulties in the ongoing chain?
The online agencies argue this is not the case. However, as their call handlers will be likely be in a call centre rather than a local office, it is hard to see past the advantages to using a high street agent if there are likely to be difficulties.
One should also look at exactly what the advertised fee includes.
An estate agent’s commission will cover everything a traditional agent does during the sales process, for example accompanied visits, online marketing and video tours. Many online agents add these extras to their basic price and charge a premium for doing so.
They may also ask for more money for introductions to ‘preferred’ suppliers including mortgage brokers and surveyors. Most traditional agents work with their contacts in the other property professions on a more personal basis. They understand it’s about finding the best person for their client to make the move as smooth as possible.
Being based in a particular geographic market is always going to be an advantage. There are always more and less desirable areas in an area, even in a post code. This means having someone who really knows the area will always be an advantage. It could even stop you from making a serious mistake which is invaluable given the sums of money involved.
But many of the online agencies aren’t without a physical presence of their own. They now have local representatives – often experienced independent estate agents – who will manage in person viewings and be on hand to provide local advice.
Estate agents will also argue they know the actual people in a particular market better. They have databases they can alert when your property goes on the market.
However, online agents also have very clever tech and as they’ll ask for permission to contact someone when they sign up to their website, they can often deliver even better automated alerts than high street agents.
Therefore, your choice ultimately will come down to price and performance. Frustratingly the figures support both.
Consumer group the HomeOwners’ Alliance have reported the three biggest online agents – Strike, Yopa and Purplebricks – have claim to them that they are achieving between 96 and 97% of the asking price of the homes they list.
Meanwhile another consumer site, The Advisory, have published their own survey showing does say high street agents get 48% more viewings, 64% more offers and, on average, obtain 5% higher final prices for the homes they list.
The choice therefore is yours. It will depend on what you count as most important when you are dealing with the sale of your home. Do you want to pay the lowest fees? Or do you want the reassurance of having someone there in case you need them?
If this blog has raised any questions or you would like to discuss moving home or buying or selling a property and want to make the process as easy as possible, please email me at [email protected] or call me on 0208 515 6600.